UK Banks slammed for dragging feet on settling misselling claims
23 February 2012
Customers settling claims against banks for misseling payment protection insurance (PPI) received almost £2 billion in compensation last year. The Financial Services Authority (FSA) said £441 million was awarded in December alone and £1.9 billion in total.
Payments rose month-on-month last year, with £268 million claimed in October and £379 million in November before the count reached peak figure in December.
Consumer group Which? called on banks yesterday, to ''do more'' to speed up the payment of claims to affected customers, who were wrongly told to purchase PPI to help repay loans in the event of their illness for a long period or unemployment.
According to the group's executive director Richard Lloyd, last year's compensation could be only a quarter of what lenders expected to refund.
He said too many people were still finding the claims process too lengthy. He added, the banks needed to streamline the process to make it easier for people to claim, otherwise the option left an open goal for claims management companies that charged people a hefty fee for putting in a claim, which was easily done for free by people themselves.
Banks had earmarked an estimated £7.6 billion for the purpose of customer grievances redressal, but with an average fee of 30 per cent, the compensation could be worth up to £2 billion to claims firms.
Barclays, setting aside £1 billion for covering mis-selling claims, came out with figures yesterday, showing PPI fuelled a 67-per cent rise in the number of complaints in its general insurance and protection business to 122,922 in the second half of 2011.